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Ts Co has daily demand for ball bearings 40 a day for each of the 250 working days(50 weeks) of the year.
Purchase price =$2
Cost of placing an order = $64
Holding costs= 25% of purchase price.I do know how to calculate EOQ, but info given about the annual demand was confusing.
Annual demand = 40 × 250 working days =10,000 units
or
Annual demand = 40 × 50 weeks × 7 days =14,000 unitsBecause 250 days = 35.7 or 36 weeks
And 50 weeks = 350 days.The answer in the kit was 10,000 units (i.e. 250 days in a year)
I guess it is printing mistake but had a doubt if such questions were to be asked in the exam, what to do then?There is no printing mistake because the wording is clear as it stands.
The first line says that there are 250 working days and that the demand is 40 a day for each of those working days.
So the total demand is 40 x 250.
(They are obviously only working for 5 days a week(
It is irrelevant because they are not working seven days a week – the question specifically says that they work 250 days a year and that the demand is 40 per day for days that are worked.
(Do you work 7 days a week? 🙂 )
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